Getting a loan to buy a boat can be a frustrating experience. The banks want to loan the money (usually with a little interest rate premium) but there are a few pitfalls that you can avoid.

Steps

1

Pre-qualify. Go to the bank and tell them that you are looking at buying a boat that you will need a loan for. Tell them you wish to know 2 things: A. How much they are willing to lend you (how much can you afford). B. How much of a boat's value they are willing to lend. In most cases they will not lend the entire value. Don't forget that value and asking price can be two very different numbers.

2

Go find the perfect boat! New boats, like cars lose a considerable amount of value when you leave the showroom floor so consider the good used market. A lot of people buy boats and then never use them, or can't afford them.

3

Take down full details. Once you find the perfect boat or a couple of perfect boats, locate and write down every identifying number you can find. If it is an outboard, do the same for the engine. If the boat comes with a trailer, get all the info from the trailer as well. Make note of how long the trailer is (usually the same length as the boat), if it is galvanized or painted (big value difference especially in saltwater), and if it has a spare tire/carrier, fenders, steps, winch, etc. If you're really interested in buying the boat, arrange to have a professional boat surveyor appraise her. There will be a fee for this, but it is always money well spent as the surveyor knows what possible problems to look for and advise you accordingly.

4

Factor in the accessories. When you or the bank tries to determine the value of a given boat, accessories are the most important aspect. Not just factory accessories either. Add-ons like downriggers, live wells, tow bars etc, add considerably to the base value. Make note of every accessory on the boat, even the seemingly trivial ones. If you do not list all the accessories, the bank will probably come up with a value that is considerably less than the boat is worth, or the asking price.

5

Go home and do your research. Go to NADA.COM and look up your boat by year and model number. If a given year does not list your model number, try the next model year. A boat manufactured in 2003 may actually be a 2004 model. Typically, if a boat was manufactured after June of a given year it is probably the next year's model.

6

Learn to read the model numbers, as they can be a little confusing. For example, take a boat with the model number of 1752VST.

The 1752 means it is 17 feet (5.2 m) long, 52 inches (132.1 cm) wide.

The V indicates that it is a V hull.

The T indicates that it has a tunnel.

7

Find out as much about the model number as you can because the factory options, such as the tunnel, can make or break the deal (the T, for instance, can add an extra $1000.00 to the value of a boat).

8

Take care in checking. When getting the value form the NADA website, be careful checking options; some are quite deceiving. The options are broken into two categories:

Powerboats (have the engine built in); and

Just boats (typically with an outboard).

9

Also take care when you check to see that your boat has a fire extinguisher. If you check that option in the powerboat category, it will add $1500.00 to the value, and you just know that isn't right. What they really mean is that it has a built-in extinguisher, which most outboards do not have.

10

Make sure you get all the accessories on your boat checked correctly. If your boat is an outboard you will need to run the value of the motor separately. You will also need to run the trailer value separately. Again, check all the accessories that are included. Simple finders up the value by $300.00.

11

Take all three values, add them up, and see if the asking price is even close. If it is, then you know how much the bank will lend on that boat.

12

Get a hold of the seller and make him or her an offer (your offer should be something around loan value + what you can afford). If the seller is close to the value with the asking price, don't waste his or her time giving a low ball offer. Chances are the owner went through the process of valuing the boat before setting the price. If it is a newer boat, perhaps the seller owes more than the value, in which case he or she probably has no room to bargain. Move on to another boat if you can not afford (or don't want to) make up the difference. Keep in mind that you don't want to be in the same shoes as that seller by owning a boat that is worth much less than you owe. Boats do not depreciate as quickly as automobiles but they do depreciate rapidly in the first few years.

13

Visit the bank. When you and the seller have arrived at a deal, gather up your values and go to your banker. Make sure you talk to a human. They are going to go through the value process just like you did and you need to make sure they come up with the same numbers as you or you are going to need to beg for more money from somebody else and spouses who aren't convinced can be difficult sources of cash flow!

14

Close the deal as soon as you can. In most markets, a boat that is priced anywhere near its value does not stay on the market very long. If you find your dream boat and arrive at an equitable deal, jump on it before somebody else buys it.